PM587 – Advanced Program Management
March 23, 2012

BEFGS – Week 4 Background and Proposal
Industry Background
Over the last century, the life expectancy of an individual has increased from 47 in 1900 to 76 in 1997. (Moody, 1997) This increase in life expectancy is due to better living conditions, better care for the sick or disabled, and breakthroughs in the pharmaceutical industry. Pharmaceutical companies have been able to aid the pursuit of longevity and health through understanding the mechanics of the human body, disease, and disease treatment and prevention. Treatment and prevention comes in the form of new drugs and consumer products which have been developed over the last century and companies in this vertical expend significant resources on the research and development of them. The main objective in the industry is to improve the quality of life for everyone.
There are three main types of pharmaceutical companies: large, small, and generic. Large pharmaceutical companies are established firms that have many approved drugs already on the market. Examples would be Merck, Bayer, Johnson & Johnson, and GlaxoSmithKline. These companies often have significant numbers of Research and Development (R&D) laboratories and manufacturing plants globally. In contrast, smaller pharmaceutical companies are usually more research focused, and often do not have any drugs on the market. Smaller companies in the pharmaceutical industry can also operate as contract manufacturers or contract research firms. Lastly, generic companies, manufacture drugs that are no longer protected by patents. Generic companies are the manufacturers that produce off-brand drugs that consumers may find listed on a pharmacy’s or insurance’s discount prescriptions list, e.g. Wal-Mart’s $4 Generic Rx list. Because their products are established drugs, they devote fewer resources to